A blog exploring the intersection of economic thinking and urban planning/real estate development and related big-think themes.

Monday, July 12, 2004

Games To Be Gamed

If there is a game to be gamed, it is very likely that some will come along to game it.

So it was with California's (anything-but) deregulation and Enron traders -- and so it is with real estate development, especially in California.

Jerry Taylor recounts the California electricity story in Friday's WSJ: "California's restructured electricity market was, in fact, the furthest thing from a capitalist jungle imaginable. The government forced electric utilities to sell of their power plants and discouraged them from buying electricity outside of a complicated state-managed spot market. Furthermore, the electric utilities were forced to open their power lines to anyone who wanted to use them -- like Enron -- under tightly regulated terms and conditions. The day-to-day management of the grid was likewise taken from the utilities and given to state regulators. While wholesale electricity prices were deregulated, retail prices remained tightly controlled ... It shouldn't come as a surprise to learn that companies like Enron figured out how to game the system ..."

The same WSJ story notes that, "A proposal for a light-rail system that would serve the far-flung areas of the Tampa region has languished on the drawing board for several years." Having seen how this plan actually puts rail transit through cow pastures, I can only hope that the plan continues to languish. The article does quote the University of South Florida's Steve Polzin as noting that sprawl's job dispersion might also offer relief to many commuters.

The punchline comes in an op-ed in this morning's LA Times by Cal Poly Pomona's emeritus history professor Ralph E. Shaffer, "A Legal Rip-Off at the Heart of Glendale." Connecting a few dots, Prof Shaffer notes that, "Those Enron tape recordings in which energy traders giggled about gouging California's electricity ratepayers was the height of audacity, but what's about to happen in Glendale, and has already happened in other cities throughout California, runs a close second." Shaffer is concerned about developer Rick Caruso "muscling in on Glendale," and seeking a significant redevelopment subsidy from the City.

Having invited politics into land use decisions that are best left to the market (even insisting that we install even more of it via regional land use planning), the high-minded complain when the game they set up is actually being gamed.

Whenever politicians set up games, some will come along to game them -- and the demagogues will be shocked (shocked!).